Mr. Speaker, I want to start with a bit of a history lesson. To the extent that Canada is doing relatively well, it has nothing to do with the current government and everything to do with the previous Liberal governments. Members may laugh, but it happens to be true, and let me explain it.
One reason Canada is doing well is because our fiscal house is in order. A second reason Canada is doing well is because we did not deregulate our banks as the Americans and British did. The third reason we are doing relatively well is because of our strong resource set.
I do not think the members of the Conservative Party of Canada can say that they put all the oil and minerals in the ground. Neither can the Liberal Party, nor can the NDP. That is what we might call “an act of God”, so no political party can claim credit for that. However, the other items, putting the fiscal house in order and keeping strong regulation of banks, were both achieved by the Liberals in the 1990s.
Thinking back to 1993, we might remember that Canada had a deficit of $43 billion, which was inherited by the new Liberal government, and there was a state of fiscal crisis in the air. There was the idea that Canada was becoming an honorary third world country and the IMF would have to come in and clean up the mess. That is why the Chrétien government, with Paul Martin as finance minister, acted swiftly to eliminate that deficit in a period of about two years and then proceeded to pay down debt for close to ten years.
Whereas at the beginning, in 1993, we were the basket case of the G7 fiscally speaking, by the time the Conservatives came to power, we had the strongest record of the G7 and it was thanks to those actions taken by the Liberal government.
The Conservatives like to criticize the Liberal government for cutting so much so quickly, but if they think back to that time, they will remember that the Reform Party of the day was telling the Liberals to cut more, not to cut less. That is point number one.
Point number two has to do with banking. Partly the reason why the Americans and the British got into so much trouble is that they went down the path of deregulating their banks, or allowing their banks to regulate themselves, whereas, in Canada we did not do that. As a consequence, our banks remained more conservatively managed. The other thing was that the federal government of the day said, no, to the proposed bank mergers. Even though I worked for Royal Bank at that time, I became convinced after the financial crisis that it was certainly the right decision. Otherwise, the banks would have become bigger and more international, more like the big American and British banks.
There are three reasons Canada is doing relatively well. First, we balanced the budget and reduced the debt-to-GDP ratio. Second, we refused to allow the banks to regulate themselves. Finally, we have a robust resource sector.
Therefore, when Conservatives say that Canada is doing relatively well, they should add this sentence: “Thanks to previous Liberal governments”. That would be my humble suggestion for the government, which I understand is likely to fall on deaf ears.
The next section of my comments is about the government's budgetary management, which I would contend has not been good, and there are several points on this.
First, the Conservatives are assuming that the growth rate next year will just jump right back up to 2.5% from its much lower level today. I cannot totally blame the government for this because admittedly those are private sector forecasts and private sector econometric models typically do project growth rates jumping back. However, this seems to be a recession unlike others, where I think we might get into trouble if we simply assume growth rates jump back and that helps to reduce the deficit. Therefore, that is a risk for the current government.
Second, the Conservatives have not done their prudence very well. I remember back in the 1990s, when I was at the Royal Bank, having a meeting with Paul Martin and other economists about how we should deal with this prudence. I remember suggesting a very scientific idea: prudence of $1 billion in year one; $2 billion in year two; $3 billion in year three; $4 billion in year four. I do not know if they did exactly that, but the idea is that the further out into the future we get, the more risky and the less certain things are, so they should have the amount of prudence in the budget going up over time into the future. The government just keeps it flat, so that displays a lack of fiscal prudence.
On catching tax cheaters, I think the Conservatives are making an overly optimistic assumption that they will get $500 million in taxes next year that should have been paid but were not, while at the same time cutting the staff and budget of CRA. I do not think that makes any sense whatsoever.
I think it is wrong for them to boast about their multiple-billion, 10-year infrastructure program when nothing significant will happen until several years out. It is very much back-end loaded. In fact, in the near term they have actually cut the amount that is devoted to infrastructure.
The final point I would make is that they simply lost $3.1 billion, the money that was to have been spent on anti-terrorism activities. The Auditor General says the information does not exist to find it. I do not understand that. I will be meeting with the Auditor General's office later today, and I hope to understand better how it is possible to lose track of $3.1 billion.
This is a government that prides itself on its fiscal management. How can one be proud of one's fiscal management if one loses track of $3.1 billion?
I would argue that this has been a government characterized by sloppy fiscal management, inadequate prudence, and other matters that do not add up to a prudent management of the budget.
The last point I would make is on this business about jobs without people and people without jobs. It is a really important issue. Attention should be directed to it. What the government has done is a total sham because it is not putting one more penny into it. Right now, the government transfers $2.5 billion per year to the provinces for training. It appears it is going to take that money back, or some of it, and then require the provinces and companies to put up more money.
How is that going to work? Often the provincial governments are in a worse deficit situation than the federal government. I know, for example, that the Government of Ontario is very concerned that the federal government will take away money that Ontario uses to train very disadvantaged people and then use it for other purposes. This would mean that the training for those disadvantaged people, who are probably not in the Conservative core, would simply disappear. The Ontario government's fiscal position is certainly less strong than that of the current government.
In closing, what I said is quite simple. First, when the government says that Canada has managed quite well, it should add “thanks to the actions of the previous Liberal government”. Second, the Conservatives have not done a good job of managing the budget.
Finally, there is actually no money in the program for training. The thing is a sham. It is not even clear if it will get off its feet. A number of provinces have already said that they have no interest in participating.
